AUSPC 2012: Business, Finance and Human Resource Development
21st Annual Arab-US Policymakers Conference – AUSPC 2012
Friday, October 26, 2012
POLICYMAKING OPPORTUNITIES IN BUSINESS, FINANCE, AND HUMAN RESOURCE DEVELOPMENT
Ms. Elizabeth Wossen – Principal and Lead Consultant, Energy Links Group LLC; former Coordinator, Congressional and Government Relations, Kuwait Petroleum Corporation; Member, Board of Directors, National Council on U.S.-Arab Relations.
Mr. Khush Choksy – Senior Director, Middle East Affairs, U.S. Chamber of Commerce; former Director, Chemonics International.
Dr. Mody AlKhalaf – Director of Social and Cultural Affairs, Royal Embassy of Saudi Arabia; Editor-in-Chief, Al-Mubtaath (“The Scholar”).
Ambassador (Ret.) Ford Fraker - Senior Adviser and Chairman for the Middle East and North Africa Group, Kohlberg Kravis Roberts & Co. L.P.; former U.S. Ambassador to the Kingdom of Saudi Arabia.
Mr. Hisham Fahmy – CEO, American Chamber of Commerce in Egypt; Founder, Egyptian Association of Executives; former Acting Director, Egyptian Center for Economic Studies.
Mr. Ken Close – Founder and CEO, Quincy International; former Senior Policy Advisor to HRH Prince Turki Al Faisal.
[Remarks as delivered]
POLICYMAKING OPPORTUNITIES IN BUSINESS, FINANCE, AND HUMAN RESOURCE DEVELOPMENT
[Dr. John Duke Anthony] Thank you Patrick. This is but a follow on to the last two sessions, the two speakers at lunch focused extensively on the private sector opportunities and challenges, but they also shared with the listeners an array of opportunities provided by the public and private sector to enhance the sinews of trade, of investment, of technology cooperation, as well as the establishment of joint commercial ventures to the mutual benefit of both parties. Our chairperson for this session is Elizabeth Wossen, a member of our board of directors and long time professional engaged in the field of energy as it pertains between the United States in the Arab world. Ms. Wossen.
[Elizabeth Wossen] Ladies and gentlemen, welcome to this afternoon’s session. And again before we begin the presentations and discussions on this timely subject, namely policy-making opportunities in business, finance, and human resource development, I too join Dr. Al-Shayji and the Honorable Jose Fernandez and would like to take this opportunity to wish all of you here who are celebrating Eid al Adha, Eid Mubarak and happy holidays and thank you ever thank you so much for sacrificing your family time to be with us.
Moving on to the subject at hand, it’s been said many times over, including quite eloquently at this conference, even at lunchtime today, that a successful economy is considered to be of the main corner store for development and progress and especially amidst transition within a constancy as applied to the MENA region today.
That said, MENA countries are facing a number of immediate socio-economic challenges with dire consequences in both the short and long term. Consider the lack of economic opportunities, which themselves played a very significant role in bringing about the recent political changes in the region.
Among a number of statistics and demographics, the youth bulge, including newly empowered women entering the economic life of their respective countries should be and are concerns to policymakers and decision makers today. To state that unemployment, the lack of jobs, is at a crisis point an emergency in fact particularly in the matter of, generally across the MENA region is an understatement. The wealthier GCC countries, which of course differ from the Maghreb in their economic circumstances, dynamics, and narratives to have their jobs challenges if not in the immediate but over the mid to long term, that could deform their economies.
Recently a number of ideas big and small have been advanced as ways to mitigate the economic challenges in MENA countries, facing the MENA countries today and into the future. As you hear these panelists, which I’ll introduce in a very quick moment, consider some of the questions and ideas that have been considered at international for a, especially at the World Economic Forum recently. I have listed some of these ideas in no particular order.
- Are the current educational systems in the region outdated, in need of reform, not preparing the citizens for the current and future jobs in their respective countries?
- Is and should the state be the main driver of economies in the region?
- Is a partnership between the public and private sector the way forward?
- Is economic integration of the region, which is very low as compared to other regions globally, a feasible solution?
- What is the role of technology, social media?
- Is heavy reliance on the state for subsidies, jobs, sustainable in the way forward?
- Is fiscal discipline or the lack of it the problem?
- What structured changes and corporate governance changes are needed for better climate of investment?
- Austerity is that a way to handle the problem?
- Change of mindset from thinking PhD to vocational training, and so on.
- And finally a very provoking idea that one Ibrahim Dabdoub who heads up a very prominent bank in Kuwait proposed and likes the idea of a “Marshall Plan” for MENA. Investments by wealthy countries and cash strapped economies in the region within a framework of strict accountability and conditionality. It’s something akin to a combination of IMF and the World Bank. Is that the way to go?
GCC countries are sitting on a lot of money and could participate in this type of Arab-Arab relations which would be a win-win model maybe. For that matter, the US private corporates are also sitting on a lot of cash and that could be also something one should look at.
Finally, when the MENA’s political transition, while it’s being debated, let us here in the meantime contemplate the state of education, training, development, finance, and business. We have at the podium five well-qualified individuals to do that. Let me call them practitioners from diverse backgrounds from whom their respective presentations will shed light on what is being done on the ground, what has been accomplished thus far, what and where the opportunities as well as the challenges are, both from the perspective of decision and policy makers and for policy making purposes.
I would like to call on Ambassador Fraker as the first speaker. Ambassador Fraker currently serves as senior advisor to Kohlberg, Kravis Roberts & Company and as Chair of KKR Middle East and North Africa, senior advisor to Trinity Group Limited and is a member of the Middle East Advisory Board of the Royal Bank of Scotland.
I will not catalogue his bio here. It’s in your booklets. However Ambassador Fraker served as US Ambassador to the Kingdom of Saudi Arabia from April 2007 to 2009, spanning both the George W. Bush and Barak Obama Administrations. Ambassador Fraker I think is bullish on small business and will probably be talking a little bit about SME’s and innovations and entrepreneurship, I call Ambassador Fraker to the podium.
[Ambassador Ford Fraker] Good afternoon. Thank you very much Elizabeth. It’s a pleasure for me to be here today. And I’d like to thank John Duke Anthony and the Council for giving me the opportunity to speak to you this afternoon and along with everybody else I’d like to offer my own best wishes for Eid Mubarak to my Muslim friends.
So this afternoon I’d like to focus on the issue of job creation and the importance of SME’s to the Saudi economy and also to talk about some important Saudi government and private sector initiatives to promote entrepreneurship and the growth of SME’s. But first I’d like to begin with a little story.
I was sitting in the lobby of a hotel in the eastern province of Saudi Arabia waiting to be picked up to go out to dinner and I struck up a conversation with a young Saudi couple who had fairly recently returned from the United States having been educated here. And I was able to talk to them about jobs and heard the frustration and disappointment that they had in their inability to actually find jobs that they thought were commensurate of their education and their abilities. So I tell this story because it actually happened 30 years ago. And so for the last 30 years this is a problem I’ve been worrying about and I thought well, if this is the case for this young couple, how many more problems are there out there like this?
And the demographics make it a greater and greater problem as every year passes with 75 percent of the population under the age of 30, clearly jobs for the young is one of the biggest problems facing the government. So why is it that helping SME’s and Saudi entrepreneurs is an important government priority and an important part in addressing the jobs issue?
So let me give you two facts – one is that Saudi SME’s account for 92 percent of all private sector business in Saudi Arabia. And number two, SME’s employ 80 percent of the private sector workforce. So if you want to grow jobs, then you have to grow the SME’s and encourage the entrepreneurs. It’s as simple as that.
So what is the government actually doing to make this happen? Well in the last eight years there have been a host of initiatives to focus on SME’s and Saudi entrepreneurs. A number of government sponsored organizations and awards have been created. In 2004 the Centennial Fund was set up and it spawned pretty recently the Saudi Arabian National Entrepreneurship Center which is ably led by HRH Abdulaziz bin Abdullah.
You also had SAGIA, the Saudi Arabian Government Investment Authority promoting through a variety of programs, entrepreneurship.
You have the Prince Sultan fund for women entrepreneurs in Saudi Arabia and you have the Prince Salman award for entrepreneurship which is given out every year.
In the private sector also, some initiatives. The Saudi Entrepreneurship Development Institute was set up by Sobhi Batterje. It provides more of a technical college approach but has been very effective, based out of Jeddah. Mohammed Jameel has sponsored the Bab Rizq programs which has seen the creation of a number of small Saudi businesses using techniques of micro-finance very effectively.
Universities also played their role. King Saud University has a joint venture with Kent State to provide an entrepreneurship program and both KAUST and KAKST also have programs, so lots of efforts to promote entrepreneurship and SME’s.
But I want to touch on one particular mechanism that really helps make all this work. Every small businessman will tell you that the hardest part of starting a business is actually getting the financing to do that. The US dealt with this problem in the post WWII era by establishing a loan guarantee program, called the Small Business Administration whereby small businesses could get loans from their banks and these loans would be 90 percent guaranteed by the US government. As you can imagine, this provided a huge stimulus in the US economy and many economists believed that the strong economic growth that we saw in the states in the ‘60s and into the ‘70s to a large extent had the SBA program to thank.
Saudi Arabia also started a similar program in 2006 specifically to encourage local Saudi banks to lend to the SME’s and entrepreneurs. Under the Saudi program which is called the Finance Guarantee Program and which is administered by the SIDF, Saudi Industrial Development Fund, the local banks make loans of up to SR2 million to local companies and 80 percent of these loans are guaranteed under the program.
So far in the last six years, 4,000 guarantees have been issued to 2,600 SME’s for a total value of approximately SR2 billion. Now this is a good start but I think it has a long way to go. The numbers sound impressive but in an economy like Saudi Arabia, a lot more can be done. But clearly this is an important and powerful mechanism for growing the SME market. It should be expanded by the government and strongly supported by all of us. Sadly time doesn’t allow for greater discussion on this subject and many others so I’ll leave it at this. But I’m happy to take questions later on. Thank you very much.
[Wossen] The next speaker is Khush Choksy. He’s Senior Director for Middle East Affairs at the US Chamber of Commerce. He has responsibilities for developing and implementing policies and programs that promote US trade and investment with the Middle East and North Africa. Mr. Choksy proposes to give a presentation on the commercial opportunities between the United States and the MENA region, a perspective from the US Chamber of Commerce. Mr. Choksy.
[Mr. Khush Choksy] Good afternoon. Thank you Elizabeth and thank you Ambassador Fraker Thank you to the National Council on US-Arab Relations and thank you to Dr. John Duke Anthony.
I would like to focus my remarks today on the economic and commercial opportunities between the United States and the countries in the MENA region, giving you a perspective from the US Chamber of Commerce and the over three million American companies that the US Chamber of Commerce, the largest business association in the United States, represents.
I’d like to reflect on the region for a minute or two in terms of how some of our member companies see it and go back to the events at the time of the revolution in Egypt. Amidst that transition, amidst the change, amidst the chaos of those days, it is also noteworthy that not a single American company suffered any material, negative damage or impact.
In fact the country manager for Coca Cola put it this way – every day they had over 80 trucks throughout Egypt taking Coca Cola cans and carrying cash with them. Not one of those trucks was stopped or the work impeded. Right at the first few days of the revolution, certain companies stopped work. But the point is that there was no business, direct business negative impact from it.
I think throughout the region inasmuch as the perspective of chaos and trouble is something that is a perceived and sometimes real impact is also noteworthy when you talk to companies on the ground, that they have not been certainly negatively impacted by the transitions in the region.
Clearly economic downturns, be they global, be they in the United States, be they in the region impacts companies and I would like to address in my remarks this morning some of the challenges and opportunities from the perspective of our member companies. Before doing so I would like to make note that over the last year in addition to the business mission to Egypt that we conducted about a month ago where we had over 100 American business leaders and 50 companies, the second largest business missionary in American history, the largest being one that President Obama led to India about a year ago. This is the second largest mission in American history and clearly the business leaders came from it with a great sense of optimism for Egypt but also more broadly for the region.
Over the course of the last several months we’ve conducted missions to Saudi Arabia, Bahrain, Kuwait, Iraq, and engaged Jordon, Morocco, Abu Dhabi, Qatar, Dubai. So in what I provide today is really a confluence of thoughts based upon a broad range of engagement with the region more recently.
Focusing on the challenges. Political uncertainty in transitions continue to be a challenge. We have challenges here at home in terms of explaining to our own policy makers, particularly on the hill in terms of the outlook from the region. And that in as much as they are transitions that those transitions to do not bode ill for the United States or American business.
Regulatory consistence and a need to modernize frameworks. That is a significant challenge that the region faces. And I will speak to that momentarily in greater detail.
Ease of business enforcement continues to be a challenge. More closely at home we also see a challenge on our side that US companies are not, outside of the very large companies and outside of those in the energy sector vis-à-vis the region are not always familiar or sometimes have impediments. A very large supermarket store in the US has constraints on personnel that it can deploy in the region. Those continue to be factors that we have to address vis-à-vis our own companies.
But I would like to focus on the regulatory issue, regulatory consistence, and our need to modernize frameworks. Because recently the Chamber surveyed American businesses and came up with five factors through the region in every one of the countries that the countries could help address that would certainly help enhance direct US business and portfolio investments into the countries.
There are five factors related to the rule of law that determine the ability of businesses to make rational investment and operating decisions and thereby have some type of expectation of returning a reasonable profit to their investors.
Transparency. Laws and regulations applied to businesses must be readily accessible and easily understood. We have certainly seen throughout the region all of the countries make great strides but it continues to be a factor as American companies look to the region vis-à-vis for example East Asia or the markets in Latin America.
Predictability. Laws and regulations must be applied in a logical and consistent manner regardless of time, place, or party’s concern.
Regulatory stability. The state’s rationale for the regulation of businesses must be cohesive over time establishing an institutional consistency across changing governments and be free from arbitrary or sometimes retrospective amendments.
Enforceability and accountability. Investors must be confident that the laws will be upheld and applied equally to government as well as to private sectors. Equally to state owned organizations or state private sector businesses, indigenous to the country or to American companies.
And lastly the due process. When disputes inevitably arise, they must be resolved in a fair, transparent and predetermined process.
From what the companies would expect from the countries in the region, these are five factors that would significantly enhance the prospects for greater US engagement and investment in the region. Certainly in terms of what we feel the United States should do as an organization that constantly advocates for greater engagement, we certainly feel that from our side, reduction of barriers, particularly when it comes to export controls would facilitate American investment in the region.
Freer trade. The Chamber advocated very successfully for the last free trade agreements. This region is unique. There is more free trade agreements through the Middle East and North Africa region than probably any other geographic region in the world. Jordon Morocco, Oman, Bahrain, enjoy free trade agreements. There certainly are other the very large countries, Egypt, and others that we feel that are more robust trade engagement from the US side would create opportunities for both countries.
The economic and strategic dialogue, which was referred to. Those are enormously useful vehicles for bilateral commercial engagement and it is something certainly from the perspective of American companies and our members we feel would be tremendously helpful.
Shifting very quickly to the opportunities, growth and demographics in the region as some of our other speakers have spelled out provide tremendous opportunity for American companies and its partners in the region. US products and technology. There’s a demand and an affinity for them and this is a region that’s unique in that price is not always a factor. Quality is certainly taken into consideration.
The service industry has given demographics in the region education and health. We continue to see tremendous opportunities for relationships between not just American companies but a broad range of actors in the region.
So in closing, the glass certainly is more than three-fourths full from the perspective of our member companies and certainly much more than half empty. There’s tremendous opportunity amidst the challenge and again reflecting on some of our engagement with the region when we took delegations, the view remains very positive. Thank you.
[Wossen] Our next speaker is Mr. Hisham Fahmy. Hisham Fahmy is the CEO of the American Chamber of Commerce in Egypt since December of 1999. Before that he was General Manager and has played an instrumental role in promoting US-Egypt business relationship through the organization of over 25 business missions to Washington, DC and other states during his tenure at AMCHAM, which is short for Egypt Chamber of Commerce, membership has reached more than 1800 members.
Hisham Fahmy previously served as Acting Director of the Egyptian Center for Economic Studies, a non-profit think tank that carries out and disseminates independent economic research. Prior, Hisham has extensively private sector experience including the development of quality systems and business development programs for the Egyptian conglomerate International Group of Investments, IGI. He has experience in the tourism sector and worked in representing engineering construction and electronics firms. Today Hisham wants to address Egypt pre- and post-revolution, challenges to prosperity, opportunities for revival and potential US engagement.
[Mr. Hisham Fahmy] Good afternoon, everybody. Yesterday my namesake Randa Fahmy prided herself on being a lawyer and she said that the way she thinks is 1, 1.1, 1.2, 2, 2.1.
I’m a chemistry graduate so I don’t think 1.1, 1.2, 1.3. I think CH3, N, O, .. so please forgive me if my speech is sort of disjointed. Also Khush thank you very much, and Mr. Fernandez, have said a lot of what I was going to say.
Before I start I’d like to wish you all a wonderful Eid, mercy.
Ladies and gentlemen, there are many challenging facing us unacceptable unemployment, a gaping budget deficit, huge debt, and an education system that is not up to our aspirations, clash of ideologies that are preventing progress on the economy. I’m not talking about the United States. These issues and more are challenges faced by Egypt. There is a macro-economic challenge. Egypt is facing a huge budget deficit, declining reserves from 35 billion to 15 billion, basically shoring up the Egyptian pound to avoid increased inflation or huge inflation. The Central Bank of Egypt has handled the revolution and the aftermath of a much slower economy, extremely well and we hope it continues to do that.
We face major issues when it comes to subsidies that affect our budget. The Egypt budget at the moment is 25% salaries for government employees, 25% interest payments, 25% subsidies, and 25% to do everything else, including education, health, and so on and so on. So you can see that there is a huge, real, I mean you really have to do something about the subsidies and that’s something I think this government is planning to do.
We’re waiting for an IMF standby agreement, which will be a stamp of approval for the government’s plan to tackle things like subsidies to basically bring down the budget deficit. We urge the United States to support an IMF agreement because this is something it will be very important, not just $4.6 billion in support but it’s a stamp of approval of a budget of a plan that will bring everybody else into the fold to support Egypt financially.
We look forward to the GCC and other Arab countries to support Egypt. I was depressed coming here thinking about the Egyptian economy and when I kept hearing all these sessions and I felt depressed even more about the whole region. And I think Egypt actually looks pretty good.
The revolution brought aspiration for the youth, aspiration of equal opportunity, aspiration of social justice. It brought the freedom of speech. And boy everybody is talking. Everybody is talking in Egypt. And everybody’s an expert. But it also has accountability to the people. But the youth who are, have expectations and I think sometimes unrealistic expectations after the revolution, are facing uphill battles. They graduate with skills that are not needed in the job market. The job market needs completely different skills.
We at AMCHAM Egypt have an online recruitment service. We have 35,000 CVs or resumes on that site and we have 2,500 job openings. So what happened? There’s a skills gap.
They face a bureaucracy that finds it very easy to say “No,” rather than to say “How can we help you?” Egyptian youth have the entrepreneurial spirit. They really do. You can just see it everywhere, and it has shown itself more and more in the informal sector. And that’s where we need to pay attention. We need to make it easier for the entrepreneurs to be formal rather than informal. So far it’s easy to just be informal, avoid everything, especially paying taxes. So we really need to work on that.
It’s easy to set up a company in Egypt. Investment company. Three days, one week, you have a company. It’s what comes after that. It’s the bureaucracy. It’s the licensing. It’s the regulations. So that’s why we have a huge budget deficit. We need the help of the US and other countries but we’re here in the US. We need the help of the US, as I said, to support the IMF agreement.
Debt relief, Egypt still owes the United States $3.3 billion approximately from loans in the ‘80s for wheat and other stuff. We ate it. We ate it up. And it’s pretty Chicago accounting stuff. I think we’ve already paid like $10 billion but anyway we still pay in interests on the 3.3 billion. Egypt pays $330 million a year repayment of interest to the United States and they have not defaulted once.
The US supports Egypt, economic support, every year for $250 million. So there’s actually in that transfer of funds to the United States from Egypt every year.
Who needs support? We really need that. I think it’s on the books. The Obama administration has promised debt relief of $1.45 billion in cash that’s stuck in Congress. But we need to really address that.
I address quickly what the private sector needs to do. The private sector needs to come look at Egypt, invest in Egypt. The opportunities are now. It’s much cheaper now to come and be on the ground. Egypt is going to grow and it’s going to be a powerhouse very soon. There is a supply chain issue. If American companies can look at Egyptian SME’s, look at Egyptian companies to bring them into their supply chain for projects not just in Egypt but in the region.
We held a supply chain conference a year ago with friends at the US Chamber and we brought many companies to look at Egyptian SME’s and how to encourage them to become part of that supply chain.
Egypt has also, has 20-30 percent of all antiquities in the world. I think the Pyramids is the best investment project that has ever been done.
So ladies and gentlemen, since my time is up, I want to ask you for one practical thing that you can do to support Egypt. Bring your friends and come and visit Egypt. Thank you.
[Wossen] Our next speaker is Dr. Mody Alkhalaf. Dr. Mody is the first Saudi female to be appointed Assistant Attaché as Cultural Assistant Attaché for Cultural and Social Affairs. She is the highest ranked female diplomat held by a Saudi woman in the world. Her current position as I said, Assistant Attaché for Cultural and Social Affairs, at the Saudi Cultural Mission in Washington, enables her to support students in two main ways.
She encourages positive cultural outreach through students’ initiatives primarily by Saudi student organizations in the US universities.
She also supports students through her department, which provides social and legal assistance to students in need of such help.
In addition to her interests in language, Dr. Alkhalaf is also an advocate for women’s rights in Saudi Arabia. She has written in the Arab News on women’s rights and is the current Editor in Chief of Al-Mubtaath, it’s The Scholar translation, it’s a monthly magazine launched in 1978 by the Saudi Cultural Mission that covers a range of topics of interest to Saudi students in the United States. Dr. Alkhalaf.
[Dr. Mody Alkhalaf] Thank you Elizabeth. [Greeting in Arabic] Good afternoon ladies and gentlemen. There is no better indicator of our personal commitment to the Arab-US relations than being here today on Eid Al Adha, and that goes for every Muslim in the room. [Greeting in Arabic]. To balance the scales, the council has agreed to hold the next conference on Thanksgiving break 2013.
The title of my presentation today is the King Abdullah Scholarship Program, Constancy within Transition. And I know the theme of the conference is Transition within Constancy but I did a deliberate switch because I believe that despite all that is going on in the world, since the program started it has been constant. Constant in its encouragement of students, of development of human resources, not only quantity wise but quality wise. I’ll start with a few statistics.
Around the world, we have over 145,000 Saudi students. The majority of them are on the King Abdullah Scholarship Program, 78 percent. Twelve percent are also sponsored by the government, but by government agencies. And then 10 percent are what we call self-sponsored students, which is a bit misleading because all of them eventually will be a part of the King Abdullah Scholarship Program, it’s just a matter of time, mostly a few months.
In the US alone, 71,000 students. And as you can see that’s the breakdown. The majority of our students in the US are here to earn their bachelors degrees. I deliberately skipped ESL because again it’s misleading, they will break out into different degrees. So the majority of the students here are working on their bachelors, followed by masters, doctoral, and then residency. The number you see on the schedule of dependence is because the spouses and children are allowed to study while they’re here as well.
Last time I spoke the gender ratio breakdown was 28 percent female. Now for some reason, I just realized this as I was preparing this presentation, it’s only 22 percent. It is worth investigating and I say investigating probably because females are doing their masters more than bachelors and graduating in faster, in more numbers faster.
This is the breakdown of our students by state. No surprise, California has the most, followed by Texas, I guess we still love our deserts, Ohio, Florida, Pennsylvania, Michigan, Colorado, Virginia, Massachusetts, and Indiana are the top ten. Going down to states with under 1,000, I was surprised to see that we had more students in Alaska than Hawaii. That, I can’t explain.
Now total number of students within discipline. The highest number of students currently in the US are studying business and management and I’ll come back to that when I talk about our efforts for employment later on. Followed by engineering, in engineering industries, IT, humanities, medical services, medicine, and law, and you can see the rest. Going down to disciplines with under 500 students, as you can see here, I guess we don’t have many vets.
All right, last time I spoke also I spoke about all the benefits the students are getting. And this is for every single student in the US. A monthly stipend for the student, the spouse, and children, full academic tuition, whether it’s a community college or Ivy League. We never discuss tuition fees. Full medical and dental coverage, dental 5000 per year, medical, unlimited, from ear piercings to liver transplants, and annual round trip tickets for students and family to keep them connected to home.
In addition, there are some other allowances that only certain students get. Like rewards for high GPA to encourage students to study harder and earn higher grades, also allowances for scientific materials that sometimes students in certain fields need but don’t have the money for, and finally allowances for special needs students, blind, deaf, and physical handicap students earn more or get more stipend than regular students.
So how we manage that large number of students in one office with less than 500 employees. A solution had to be created.
By providing a 24-hour support system, worldwide access, and full integration with the Ministry of Higher Education, the EGOV portal is an important tool in the successful communication between the Cultural Mission and the widely dispersed Saudi community. “It’s really transmitted the student to a new era.”)
So as we like to nickname it, SAF, was launched August 2011 and it has really helped us monitor the student and meet the student needs. So what does SAF do? It helps us process their daily requests. Daily the mission gets over 3,900 requests. We process over 2,880 a day. After 72 hours, only 20 or less remain unprocessed. And for all my students listening here, processed does not necessarily mean accepted. It could be rejected.
So what are these top ten requests? Obviously paying tuition, financial guarantees for admission purposes, general inquiries, financial guarantees for academic tuition, and reimbursement. And I’d like to stop here at reimbursement because we even reimburse students for taking the TOEFL the IELTS the GRE or the GMAT.
Now, with all of these services, we’ve met the needs of the majority of students but we realize there are certain students that need more help from the Saudi cultural mission, prominently medical students.
To help meet the ever growing needs of its student body, SACM has developed many new initiatives and programs over the last five years. “The scholarship program is not only for bachelors degrees, it can extend up to residency for your MD program.” In 2007 the program proudly opened its department of medical and health sciences presenting students with a variety of career opportunities. “Really we appreciate them that they offer for special for woman to continue her studying in nurses. We don’t have that, we work in Saudi Arabia and they really help us to get what we want from this program” Collaborating with leading institutions for hands on experience, the department is opening more doors for Saudi students than ever before. “They really want every student, every doctor, that’s under this scholarship to really have the opportunity and the chance. They don’t want anybody basically left behind. They make sure that they do their best to get everybody a residency because at the end of the day, that’s what we’re here for.”)
True. So what did the Cultural Mission do? It decided to start affiliations and sign MOU’s with teaching hospitals and medical universities with medical departments. Those MOU’s would guarantee certain seats for Saudi students only where they would compete against each other and that seat would be funded by the King Abdullah Scholarship Program.
These are the number of students under the department supervision. I’m going to skip the USMLE and ESL again because it’s misleading. The highest number with over 350 is the medical residency and fellowship students, followed by dental, pharmacy, health science, and finally nursing. So did that step work?
Yes. From about 20 affiliations in 2008, we now have over 147. Actually in 2012 it’s even more than that. And you can see from the graph here how much that’s increased acceptance into Tufts, Toledo, GW, and the rest of the schools.
What has that done for residency research and fellowship? Well if I go just to the total, you’ll notice in one year that’s 32 seats for Saudi students. Thirty-two medical professionals going back to work in the job force. Speaking of work. We know that the ultimate goal of every student here is to go back home and work.
It’s also almost a nightmare causing anxiety to the majority of them that they will not be able to find a job aligned with their qualifications. Like parents who think their job is never done, we know that our job is not just academic supervision.
We decided to empower our students a little bit more and give them a little edge before they go back home. So we started encouraging internship opportunities and you can see from the number of companies here that the embassy, His Excellency the Ambassador himself, and the Cultural Mission have met with all of these personally, either the Cultural Mission or the embassy and you can add on that the US Embassy in Riyadh as well to encourage them to take our students on for internship opportunities during their studies or on OPT after they graduate.
We’re also working with the Ministry of Higher Education into sponsoring that one or two years OPT where the students will continue to be funded by the Cultural Mission if they were employed in internship opportunities. That has not happened yet but we hope it will happen soon.
In addition, for five years now, the Cultural Mission has been celebrating its graduates by flying them in from all over the states to celebrate their graduation. All expenses paid, two nights at a nice hotel, and then we realized they just don’t want to party – they want a job.
So three years ago we decided to add a career fair. The statistics from last year were we had over 78 exhibitors, Saudi companies or Saudi based companies that offered over 4,700 jobs and conducted over 1,300 on site interviews. This was just 2012. And during that job fair, we had free workshops and seminars, related of course to employment.
A work in progress is a SACM career website. It should be done in a couple of months or less where all students can upload their CVs and potential employers can search that database or post jobs throughout the year. Are we just supporting job seekers, no? And many of my colleagues spoke about promoting job creators and that’s our next step. That’s our look into the future. During the career fair last year we partnered with the National Entrepreneurship Institute to offer a free workshop to students. I extend my hand in collaboration with Ambassador Fraker to see what we can do and collaborate on enlightening the students in their options before they graduate here and also with Mr. Fernandez with the State Department.
We also know that another way to create jobs is students that have novel ideas. So in 2011 SACM decided to contract a top law firm to prepare, file, prosecute and obtain US patents for all sponsored students with novel ideas. All rights are conveyed directly from the US government to the inventor but in return the inventor grants a royalty-free, non-exclusive license to the Kingdom of Saudi Arabia for the life of the patent.
Since then we’ve had 200 applications, 133 files opened, 25 of them in chemical fields and 108 in electrical and mechanical fields. Some of these ideas are bound to create jobs in the future. And finally, in conclusion,
Inspiring future generations and building new possibilities. The Saudi Arabian Cultural Mission is helping shape the lives of countless students by providing them new opportunities, unique life experiences, and an exceptional education. All of which they will one day bring home to the Kingdom, building progress, strength, and deepened respect for the future of Saudi Arabia.
Thank you for listening.
[Wossen] Last but not least I’d like to ask Ken Close to come to the podium. Ken is going to be commenting on these presentations and adding some of his own thoughts. Ken heads Quincy International, a merchant bank and strategic advisory firm that specializes in Saudi Arabia.
He has been advising both defense and non defense companies on effective business practices in the Kingdom for decades helping his clients understand Saudi government priorities, arranged joint venture partnerships, comply with FCPA regulations and sell their products and services while contributing to the countries economic development at the same time. Thank you, Ken.
[Ken Close] Thank you, Elizabeth, very much for that introduction and thank you, Dr Anthony, for having me here today to make some comments.
Obviously our time is short, I think we’ve run over, and my job here as a commentator is to try to facilitate a little dialogue a little bit. It’s a little difficult when you guys don’t have a microphone so I wish you did, but in any case we’ll try to do that between us and the audience and I’ll be quick so we can try to have some of that conversation.
I’ll just focus for a minute on policy making which is the focus of this conference obviously but in a corporate context, in a business, finance, and human capital development context briefly. As Dr. John Duke suggested to us all yesterday, in the paper that was on your table when you walked in, the dynamics of policymaking really boils down to answering some key “How” questions, and he enumerated a number of those for each of the panels in that short paper.
I spend my days giving advice to corporate policymakers on how to be successful in the Middle East. It’s not easy. It’s not a task for the faint of heart. International sales is a difficult, time consuming job done at a distance and at a great cost. But today that advice focuses a lot on how to cooperate with and support government policy makers as they look to develop their own economies and their own human capital. And that also is a non-trivial pursuit. This is very difficult.
So what we look at, we spend a lot of time looking at, is how can foreign corporations who are looking to sell into these markets support the economic development aspirations of these governments? Read create high value, sustainable jobs? And the sustainable part is the really hard part. We could spend a long time talking about offset programs and how those haven’t worked quite as effective as they could. I think they could work effectively, but its difficult because they trans-sector they fall over a number of different government agencies, all of whom have competitive interests. And as we all know, governments don’t cooperate very well internally with each other.
So any case we look at how can companies from a perspective of enlightened self interest proactively transform their standing from vendor to partner? It’s really a difficult thing to do but it can be done. How do they switch themselves from looking like a foreign opportunist to an ally? The country and of the government of the people frankly.
I think the dynamics of that interplay between private sector and public sector policymaking is really going to be the key to success in these markets for everyone concerned. If companies can actually do it and if governments can stand side by side with them as they try to do that. So the one simple answer I offer my clients, or maybe perhaps it’s a warning, is if you’re going to be successful over here, you’re going to have to invest directly and take real risk.
Hopefully side by side with a government that has the foresight to understand what it means to build sustainable, industrial, platforms that can be weaned off the government dole eventually. So that’s just a quick couple of thoughts that may provoke some conversation. Thank you.
[Wossen] Thank you, Ken. We have very little time left, however we have a few questions in the queue, and we welcome a couple additional before we wrap up. The first question is for Mr. Fahmy. In 1977 there were riots in Cairo against the IMF subsidy cuts and Sadat promised to privatize state owned enterprises. Today is nearing the end of 2012 so when will they actually do this.
[Fahmy] When will they actually riot?
[Woosen] That they’ve done. Cut subsidies.
[Fahmy] Listen if they don’t..
[Woosen] I think it’s privatizing state owned companies
[Fahmy] There’s no more privatization for a while. It got a bad rap and it’s not going to happen for a long time, if that’s the question.
[Woosen] I think that’s the question.
[Fahmy] So they’re not going to privatize.
[Wossen] So no privatization. The second question is for Dr. Mody. Do all the Saudi funded students enter US institutions on merit or are they reserved slots and graduate rates.
[Alkhalaf] No, all our students have to qualify for every seat they have, even the medical ones. The criteria is not lowered for our students. It’s just the competition with other international students is less so that they only compete against each other. But if there’s a certain qualification then they have to meet that qualification.
[Woosen] Thank you. We are having trouble reading the handwriting of the third question here.
[Close] Want me to try? It’s a bit long. Continuous issue under consideration by the US Supreme Court concerns reserving seats in higher education for particular groups. In other words should there exist a level playing field… same question.
[Alkhalaf] It’s a different, the first one was about criteria. This one, I’d just like to note something. Sometimes teaching hospitals more often than not and universities are allowed certain seats for residency or fellowship, lets say six seats. They can only afford to fund 4 seats for that particular year or years to come. What the Cultural Mission is doing, it’s coming in and saying you’re allowed six seats. We want the one or two seats that you’re not able to fund. We will fund them with one condition – competition is for Saudi students only or among students only.
[Wossen] Well the next question is to you as well Dr. Mody, the Saudi government gives scholarship or fellowship to foreigners, Americans to study research in Saudi Arabia?
[Alkhalaf] In Saudi Arabia? Yes there are certain schools that have certain scholarships for foreign students. Several of our private universities including some of our government universities. Government universities mostly in Arabic and Sharia, private universities in all fields. So if that person is interested they can email me and I’ll connect them to the right schools.
[Wossen] Are there questions from the floor maybe?
[Question from the floor] Inaudible
[Anthony] For those at the far end who couldn’t have heard that, could you address positive changes in the recent years making it easier for foreign businesses?
[Woosen] Small and medium enterprises.
[Anthony] Small and medium enterprises.
[Fahmy] No I think there has been a real push for SME development. I think especially the Muslim Brotherhood that has come in, is stressing a lot on small and medium businesses. I think that’s one of their mantras is to promote SME’s in Egypt and to, it’s part of the social justice plan.
[Woosen] Alright if there are no further questions.
[Anthony] I have one. With regard to some aspects of tourism, sort of a creative innovative appealing to northern Europeans and others who starve for the sun in the winter months and want to head south to Tunisia, Morocco, Egypt and places like Hurghada and elsewhere on the Red Sea, under the previous administration these were allowed and they were certainly on the margins of Egypt geographically.
But thousands have participated in these exercises, Club Med like, enterprises. Do you foresee or how do you foresee the Muslim Brotherhood element in the Islamist character of the new government in dealing with this kind of tourism? Topless tourism?
[Alkhalaf] I know that question is not for me.
[Anthony] I know because I brought my two twin sons to Hurghada, and I hadn’t been forewarned as to what was there when we were passing and walking in the sand and one boy said, “Dad what’s that?” And I looked and I thought my gosh that couldn’t be true, and then the other boy said “Dad, dad yes what is that?” and they were twins so I had one hand over the right boys eyes and one hand over the other but they were both prying my fingers apart. I’ve not been back there. I don’t have enough hands.
[Fahmy] No there has nothing.. well definitely forget the topless. But the government has made it clear there will be no actions to be taken so far in preventing beach tourism as it stands. That remains to be seen of course but that is the public statement of the government.
[Wossen] I think there is one final question.
[Question from the floor] Inaudible
[Anthony] How Islamic banking criteria affecting foreign and western investment choices in Egypt?
[Fraker] I think it’s fair to say that one of the greatest developments in banking in the Middle East has been the rise of Islamic banking starting in the ‘80s and you’ll find that every single bank operating certainly in Saudi Arabia and throughout the Gulf will have some aspect of Islamic banking available to their clients should they want it. In no way has it been an impediment. In many ways it’s promoted business.
One of the things I should have said when I was describing the Saudi guarantee program is that it is Sharia compliant so if you want to have that option its available to you. So I think it should be seen clearly not as an impediment but an addition to a range of options available to companies and entrepreneurs who want to set up businesses.
[Wossen] I think Khush wanted to add something.
[Choksy] I certainly agree with everything Ambassador Fraker has said, just in addition, the US Chamber is participating at a world Islamic banking conference in Bahrain in early December this year and you have very large US institutions such as Citi that have Islamic banking entities that have grown.
[Close] I don’t think whether you have Islamic finance or regular finance, it really affects entrepreneurship very much. The early capital is largely equity anyway. What really affects the formation of a vibrant entrepreneurial community is equity exits. You got to have a way to raise the capital from incubators and other, but people have to have a desire to take that risk and the only way to do that is if they have a way out.
So when these capital markets mature and I think when the Saudi stock market, which is the biggest now, but its the biggest now because there are giant companies on it, it’s not the biggest in terms of breadth. So as these things widen I think you’ll see more entrepreneurship funded. But banks are not very good at funding entrepreneurs as I think anybody who’s ever asked a bank for a loan, you better have the money before you ask for it cause you’re not going to get it. So I don’t think entrepreneurship and banks really go together at all.
[Question from the floor] Question about the scholarship fund. When you were going through the presentation you were sort of surprised about the figures of women and men. Do you also have a way of tracking for instance you showed the slide of the different programs the students are in starting with business and so forth do those change a great deal per year or are those pretty much set. The kingdom is looking for approximately this number of business graduates, this number of humanity graduates, and has the program been going on long enough that you can look back and say this is actually what’s taking place, this is what’s happening to those students so therefore it’s not only a quantitative success but a qualitative programmatic success in relation to the Kingdoms ultimate goals.
[Alkhalaf] It’s a good question thank you. Theoretically speaking when the program first started it was based on brainstorming and the needs of the job market. And that’s why when it started it was opened to certain disciplines mainly in sciences, engineering and medicine and a little bit in business and IT.
What happened is when students started studying. First of all they started doing their ESL and when admissions were tough in those fields they started transferring in and out of different disciplines so there was a bit of a chaotic transfer. And that’s why you saw the jump in business. We now realize that that could be a danger and it would increase unemployment so now we’ve stopped.
We stopped scholarships in business and we’ve stopped allowing students to transfer into those fields if they already have a scholarship unless it’s for a really good reason at a really great top school. Hopefully that will help what you just said, get them into the right channels again. Does that answer your question? And if those numbers change per year, they do it’s a build up. But yes, relatively speaking, we’d still have more next year in business until we succeed in getting it down again.
[Comments from the floor]
[Alkhalaf] Yes 17 disciplines to be exact.
[Wossen] Question there and that’s the last one
[Question from the floor]
[Alkhalaf] I’m not in the Ministry of Labor or directly involved in business but I’ve spoken to enough people to know that, yes, there are rigid laws right now about what you just said and that there are incentives for companies that hire more Saudis, financial incentives and other incentives as well. So it’s really a work in progress but it’s much more aggressive probably than when you were involved in the Saudi business job market.
[Fraker] What I would add to that is that the any of these entrepreneurial programs that I was talking about there’s a real element of the Saudization part that is critical if you actually want to get a business up and running and licensed. And you have people like SAGIA and others who play a role in that. I’ve recently established a company in Saudi Arabia and have boots on the ground first hand knowledge of how this works and everyone is taking it very seriously.
[Wossen] Dr. Anthony you have one final comment
[Anthony] Perhaps an oversight on our side was not to have someone here from the Department of Commerce or the US Trade Representatives office or the Oversees Private Investment Corporation, but what many people are unaware of is the extraordinary service that the Department of Commerce provides in each and every country, each and every embassy, often times in some of the Consulate Generals. A fine commercial service representative is there, paid by your tax dollars, and tasked with looking out for opportunities for a US trade and investment and the establishment of joint commercial ventures.
They can help with the research, they can help with the validation, they can help with the information regarding the capitalization of this company versus that one, the other distributorships, partnerships, brand identifications that this company has, how long it’s been in existence, all of these things that are costly if you were to get a private consultant to run them down.
But they Foreign Commercial Service is one of the best bargains I think in the American Embassy services rendered to Americans wanting to travel abroad, invest abroad. Especially invest abroad or establish a business abroad. There seems to be an American aversion to going to the embassy, using the embassy, even calling the embassy for assistance. But they are there for your assistance and some of those, the one in Saudi Arabia about 15 years ago was number one worldwide in terms of the effectiveness of providing effective successful profitable business opportunities for Americans in Saudi Arabia. It’s pretty much that way in Egypt and elsewhere, increasingly in the United Arab Emirates also.
[Fraker] If I could just echo John Duke’s comments having run an embassy with commercial operations in three locations in Saudi. I came in as ambassador having spent my entire career in the private sector and had no idea of the resources and the capabilities that the embassy actually had on hand and could offer to American companies. It sort of runs counter to the old joke that, “We’re the government and we’re here to help.” In this case it actually is absolutely true.
[Wossen] On that note, we’ve run out of time. Please help me thanking the panelists today.